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FATF includes Nigeria, S’Africa under increased money laundering monitoring

The Financial Action Task Force (FATF), has added Nigeria and South Africa to its list of countries under increased money laundering monitoring, urging them to intensify efforts to tackle money laundering and terrorism financing.

In its review released in Paris, France, on Friday, FATF said this list is often externally referred to as the “grey list”, indicating a commitment to swiftly resolve the identified strategic deficiencies within agreed timeframes.

The review included 23 other countries, including nine other African countries previously under increased monitoring.

In the case of Nigeria, the review said the country “made a high-level political commitment to work with the FATF and Inter-Governmental Action Group against Money Laundering in West Africa (GIABA), to strengthen the effectiveness of its Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) regime.”

It also noted that since the adoption of its mutual evaluation report (MER) in August 2021, Nigeria has made progress on some of the MER’s recommended actions to improve its system.

These include improving its AML/CFT legislative framework, updating its assessment of inherent Money Laundering, Terrorist Financing and Proliferation Financing (ML/TF/PF) risks and strengthening its implementation of targeted financial sanctions.

Accordingly, it said Nigeria will work to implement nine FATF action plan by:

  • Completing its residual ML/TF risk assessment and updating its national AML/CFT strategy to ensure alignment with other national strategies relevant to high-risk predicate offences;
  • Enhancing formal and informal international cooperation in line with ML/TF risks;
  • Improving AML/CFT risk-based supervision of FIs and DNFBPs and enhancing implementation of preventive measures for high-risk sectors;
  • Ensuring that competent authorities have timely access to accurate and up-to-date Beneficial Ownership (BO) information on legal persons and applying sanctions for breaches of BO obligations;
  • Demonstrating an increase in the dissemination of financial intelligence by the FIU and its use by law enforcement authorities (LEAs);
  • Demonstrating a sustained increase in ML investigations and prosecutions in line with ML risks;
  • Proactively detecting violations of currency declaration obligations and apply appropriate sanctions and maintaining comprehensive data on frozen, seized, confiscated, and disposed assets;
  • Demonstrating sustained increase in investigations and prosecutions of different types of TF activities in line with risk and enhancing interagency cooperation on TF investigations; and
  • Conducting risk-based and targeted outreach to Non-Profit Organizations (NPOs) at risk of TF abuse and implementing risk-based monitoring for the subset of NPOs at risk of TF abuse without disrupting or discouraging legitimate NPO activities.

Jurisdictions under increased monitoring are actively working with the Forum to address strategic deficiencies in their regimes to counter money laundering, terrorist financing, and proliferation financing.

Increased monitoring

FATF explained that jurisdictions under increased monitoring are actively working with the Forum to address strategic deficiencies in their regimes to counter money laundering, terrorist financing, and proliferation financing.

“When the FATF places a jurisdiction under increased monitoring, it means the country has committed to resolve swiftly the identified strategic deficiencies within agreed timeframes and is subject to increased monitoring,” it explained.

“The FATF and FATF-style regional bodies (FSRBs) continue to work with the jurisdictions below as they report on the progress achieved in addressing their strategic deficiencies.

“The FATF calls on these jurisdictions to complete their action plans expeditiously and within the agreed timeframes. The FATF welcomes their commitment and will closely monitor their progress. The FATF does not call for the application of enhanced due diligence measures to be applied to these jurisdictions,” it said.

However, the review noted that “The FATF Standards do not envisage de-risking, or cutting-off entire classes of customers, but call for the application of a risk-based approach.”

But, “the FATF encourages its members and all jurisdictions to take into account the information presented below in their risk analysis.”

The FATF said it identifies additional jurisdictions, on an on-going basis, that have strategic deficiencies in their regimes to counter money laundering, terrorist financing, and proliferation financing.

A number of jurisdictions have not yet been reviewed by the FATF or their FSRBs, but will be in due course, it added.

The review also observed that since the start of the COVID-19 pandemic, the FATF has provided some flexibility to jurisdictions not facing immediate deadlines to report progress on a voluntary basis.

“The following countries had their progress reviewed by the FATF since October 2022: Albania, Barbados, Burkina Faso, Cambodia, Cayman Islands, Gibraltar, Haiti, Jamaica, Jordan, Mali, Morocco, Myanmar, Panama, Philippines, Senegal, South Sudan, Türkiye, UAE, and Uganda. For these countries, updated statements are provided below.

“The Democratic Republic of the Congo, Mozambique, and Tanzania chose to defer reporting; thus, the statements issued in October 2022 for those jurisdictions are included below, but it may not necessarily reflect the most recent status of the jurisdictions’ AML/CFT regimes,” it said.

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